A recent survey by Harris Interactive for America's Health Insurance Plans (AHIP) found that most Baby Boomers underestimate their risk of missing work for an extended period of time due to a disability. Yet they believe that they are more likely to suffer such a disability than to die prematurely. What's wrong with this picture? Like most breadwinners, Boomers buy family health insurance and life insurance to protect their families while skimping on long-term disability insurance.

How far off are the disability risk guesstimates of most Americans? A study sponsored by the Life and Health Insurance Foundation for Education called "The Real Risk of Disability in the United States" found that a white-collar worker between 35 and 65 years of age has a 27 to 31 percent chance of becoming disabled for 90 days or longer. Unfortunately, the duration of disabilities has increased substantially in the past few decades. In the 1970s and 80s, a 35-year-old male with such a disability would have been out of work, on average, almost four years. Today it's six, because better medical care means that people with terminal illnesses are living longer. It does not, however, mean they are able to pull in their pre-disability income while they're ill.

Steven Crawford, a Maryland-based disability insurance specialist, believes that a well considered policy is the keystone to any sound financial plan. Unfortunately, he notes, most financial advisers, not to mention the media at large, rarely mention the subject, even though a person's ability to generate income is by far their most valuable asset.

"Everybody should have the maximum [benefits] they can afford," Crawford says. "Somebody 20 years old—their liability is huge. A 55-year-old's liability is less."

Figuring out how to find quality, low cost health insurance suited to your specific needs is a time-consuming process. First, you have to determine how much you'll need to maintain your lifestyle, remembering to factor in new expenses that could arise due to your disability. Then, you calculate what income you'll receive from sources beyond a private health insurance plan. These include benefits from your employer's group plan, your personal savings, and possible government benefits such as social security disability insurance.

"If you're making a six-figure income, you really shouldn't be covered by a group long-term plan," Crawford says. The coverage is cheap, but you're not going to receive nearly enough of your pre-disability income to sustain your current lifestyle. Sixty percent is the standard rate of income replacement on most plans. Why not higher? According to Crawford, the insurers want to pay "the maximum amount needed for you to get by without removing your incentive to go back to work."

The subject is unpleasant for many, which may explain why so many people think of injury when they hear the word "disability." In fact, according to AHIP's Guide to Individual Disability Income Insurance (www.cap.org/apps/docs/insurance_programs/AHIP_Guide_Individual_Disability.pdf), 89.5 percent of claims are caused not by injury, but by illness. The guide is a great source of information about the many types of policies out there and the enormous variety of choices within each and every one of those policies. It also contains a checklist of questions to ask a reputable, knowledgeable agent when you're ready to face the realities of your disability insurance needs.